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Geely commits to investment of 234 mln pounds
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Aston Martin stock rises to a more than two-month high
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New share subscription to bring AML 95 mln pounds in cash proceeds
May 18 (Reuters) - Aston Martin's shares jumped nearly 25% on Thursday after the luxury carmaker announced a 234 million pound investment by China's Geely, doubling the automotive firm's stake to make it the third-largest shareholder.
Geely will acquire about 42 million ordinary shares from Chairman Lawrence Stroll's Yew Tree, currently Aston Martin's largest stakeholder, at 335 pence each and subscribe for another 28 million shares at the same price, raising about 95 million pounds in cash for the British firm.
Aston Martin shares, which closed at 231.2 pence on Wednesday, were trading at 267.8 pence at 1056 GMT, having risen as high as 288.0 pence.
For Aston Martin, the preferred ride of fictional secret agent James Bond, the investment paves the way to secure its long-term future and cut its net debt, which stood at 868.1 million pounds at end-March.
Earlier this month, the century-old company, which has gone bankrupt seven times in its history, said 2023 would be its "peak year" for capital spending.
"They offer us a deep understanding of the key strategic growth market that China represents, as well as the opportunity to access their range of technologies and components," Stroll said about Geely in a statement.
Geely, which owns multiple brands including British sportscar maker Lotus, Zeekr, Volvo and - via a joint venture with Volvo - Polestar, had acquired a 7.6% stake in the Formula One team sponsor in September last year.
That came after the carmaker rejected Italian investment group Investindustrial and Geely's proposed funds of up to 1.3 billion pounds ($1.64 billion) in July.
"Our decision to increase our shareholding in Aston Martin reflects our confidence in the company's growth prospects, its technologies and its management team," said Geely Chairman Eric Li.
The investment will give Geely a 17% stake in the company and entitles it to one board seat, behind number two shareholder Saudi Arabia's Public Investment Fund (PIF).
Aston Martin expects profitability to improve this year as it begins deliveries of its next-generation sports cars in the third quarter. ($1 = 0.7923 pounds) (Reporting by Eva Mathews in Bengaluru; Editing by Savio D'Souza, Robert Birsel, Kirsten Donovan)
